Ninth WTO Ministerial Conference in Bali, Indonesia
Unwarranted surrender by India at Bali
Bhagwati Prakash Sharma
The Government of India has compromised with the economic interests of the country by agreeing upon trade facilitation at the Ninth Ministerial Conference of the World Trade Organisation (WTO) at Bali, Indonesia. Trade facilitation will prove to be an agreement on import facilitation for the country and in turn would lead to imbalances in trade and balance of payments. It is strange that, India has been firmly opposing to trade facilitation from the very beginning since 2001. Trade facilitation was one of the four Singapore-issues that were set aside on the single handed opposition of the then Commerce Minister of India Murasoli Maran in 2001.
Recently till three months back, Indian Commerce Ministry was also resisting fully to any binding rules on the trade facilitation. Even Shri Hardeep Singh Puri, India’s ambassador at WTO Panel discussion had explicitly expressed strong reservations over including ‘trade facilitation’ in the WTO negotiations. But, India has now surrendered to grant greater market access for Chinese as well as South-East goods as well as Euro-American companies in order to buy a ‘Peace Clause’ for of the Food Security Act. Surrender on trade facilitation will prove to be a suicidal step for Indian industry and trade. The agreement will lead to relentless increase in import of goods from China, other South-East Asian countries and the United States of America, and sequentially will result into growing foreign trade deficit, closure of local industries and rampant unemployment.
Even India’s agreement to a four-year interim measure for a ‘Peace Clause’ on public stockholding for food security is not enough. After the lapse of the ‘Peace Clause’ period, Country would be in tight spot as the WTO pledge will prevent the government to provide further food security to the citizens of the country. It was an opportunity for the country, where country should have taken a firm stand for revising the external reference price under Agreement on Agriculture of WTO. External reference price at 1986-88 level is out relevance. In case of Rice, the external reference price (ERP) of Rs 3.52 is immaterial, where the present minimum support price (MSP) is Rs 19.65.
Therefore, India should have insisted for revision of the external reference price (ERP) in conformity with the inflation tables of the World Bank. In that case, there would have been no need to buy a ‘Peace Clause’ in return for surrender on trade facilitation. Moreover, India’s public stockholding under the food security agreement is not going to distort the global trade in food grains. So even, this difference of Rs 16.13 between the ERP and our Minimum Support Price (MSP) for rice cannot be treated as trade distorting subsidy. This surrender on trade facilitation would inflict heavy liability upon India to upgrade customs infrastructure, ports and other infrastructure.
The exporters from abroad shall get right to claim damages for every delay in customs clearance beyond the prescribed time. Such damages may run into several thousand crores of rupees in a year. Besides Chinese & Euro-American companies would succeed in getting advance clearance of their consignments of auto spares and pharmaceuticals etc. Such trade facilitation is none less than import facilitation into India, leading to industrial closures, unemployment and relentless growth in deficits in trade and payments. India’s surrender on trade facilitation was irrational and unwarranted at Bali.
Swadeshi Jagran Manch (SJM) strongly criticised the Government of India’s last minute compromise in World Trade Organisation (WTO) Ministerial conference at Bali. The Government of India has compromised the interest of India in general and farmers’ community in particular. The Government has done so without any quid pro quo on behalf of the developed countries whatsoever.
In a statement issued in Delhi on December 10 by SJM spokesperson Dr Ashwani Mahajan said the agreement arrived at in Bali is being termed as a big victory by the government but it is actually a defeat. He said the argument of the government is that 33 countries have given support to the food security legislation enacted by the Parliament. According to this agreement international trade related hurdles have also been removed, as developed countries have agreed, not to raise dispute about support for public stock holding of food grains for food security exceeding the threshold limit of 10 percent of the total value of agricultural produce.
From the very beginning of this conference Indian delegation led by commerce minister Anand Sharma was firm on the demand that, this ‘Peace Clause’ is not acceptable to India. On December 5, 2013, in a press conference held at convention premises in fully packed hall with more than 500 media people, Anand Sharma said that, food security is non-negotiable for India. Elaborating the present in equitable and unjust system and rules of WTO, he said that the according to the formula for calculating support for Public Stock Holding for food security is unreasonably loaded against the developing countries, as the base year for pricing of food grains has been pegged at 1988 prices (25 years old prices). After 1988 prices of food gains have gone manifold and therefore they cannot be accepted and there is a need to change the WTO rules.
However,by the evening December 5 after his meeting with US trade representative with the mediation of Indonesian trade minister and probably the phone call by Indonesian president to prime minister Manmohan Singh (as per newspapers’ reporting), scenario changed and Indian delegation softening its stand caved in leaving all its argument with regard to unjust trade rules and gave its consent to the final draft of agreement, and by the morning of December 6, 2013, the draft was put on the website of WTO.
Foreign eye on Indian Food Security
Final draft for agreement as notified by WTO has a clear transparency clause, which unambiguously states that it must notify to the Committee on Agriculture that it is exceeding or is at risk of exceeding either or both of its Aggregate Measurement of Support (AMS) limits (the Member’s Bound Total AMS or the de minimus level) as result of its programmes. Draft also mandates that Committee on Agriculture shall monitor the information submitted under this decision. This implicitly implies that the country will have to admit year after year that it is exceeding the threshold limit of support on public stockholding for food security; and this information is subject to scrutiny by the member countries.
No New Food Programme Any More
As per the draft, this ‘Peace Clause’ will be applicable only to the existing food security programmes as of the date of this decision. Further, this agreement covers only Agreement on Agriculture (AoA), and not ASCM, without which the programme may be accused of impacting the export market, even if involuntarily, and would be subject to dispute.
End of Doha Development Round?
For the last five ministerial meetings, though no headway could be made in DDR, but hopes were alive that the issue of unequal treatment for developing countries and LDCs, leading to losses in international trade, would be addressed to. It is notable that developed countries give mammoth subsidies and there is a long standing demand of developing countries to reduce these subsidies. Not Trade Facilitation, Actually Import Facilitation Final draft agreed in Bali, mandates developing countries to ensure various measures of trade facilitation.
It is unfortunate that no cost assessment has been made by Government of India about implementing the provisions of trade facilitation. However, this is a fact that meeting this cost would mean a huge diversion of resources from public services such as health care, food security and education to customs administration.
Therefore the claimed ‘victory’ of Indian delegation is actually a defeat. This can at best be said to be the victory of present regime, in overcoming possible international trade dispute in implementing food security programme, which is being seen as an election gimmick to garner votes. However in reality, this agreement has actually eroded sovereignty on the one hand and put a ceiling on the freedom of future regimes to announce any more food security programmes.